Buzz of the Street: Is the Recession Over?
Some of this week's most insightful and timely vibes.
Note: Some links may require Buzz subscriptions.
Monday, October 26 2009
By Quint Tatro
As we roll through the afternoon I wanted to send out a brief note regarding the action I see unfolding. While we don't have much short exposure, what we do have can give us a nice boost, so rather than take more gains when Steel ETF (SLX) reaches my first target of $55.16, I will simply roll down a stop to break even and let it run.
If you are wondering what to do here, and maybe you are new to the whole 'shorting or hedging game' I want to bring your attention to the ProShares Short Trust Dow 30 (DOG). This won't be the most exciting short on earth, but it also won't kill you should we see another snap back higher. Rather than play the technicals off the actual ETF, I think it important to play them off the Dow Jones Average itself.
I am watching the September 23rd high in the Dow as my clue on whether or not to start some DOG today in the FlexFolio. Depending on when this happens, as it may be an end of the day activity, I will take the position with a stop at new lows on the ETF DOG.
My goal was to simply give you a heads up so that you understood where my thoughts were here.
Don't be a hero into the bell, there is no reason to do anything knee jerk other than to let trades come to you.
This is from Quint's FlexFolio which is up +18% YTD - Click here for a free 14 Day Free Trial
Editor's note: Quint had positions in SLX at the time this Buzz was published.
Watching the Dollar versus Gold
By Michael Paulenoff
One of the key market relationships we're watching is the dollar and gold. If the dollar turns up in a big way and sustains the gains into the close, then tomorrow could be a very dangerous session for equities. The daily cash dollar index (DXY) popped above its nearest-term resistance line this morning, which triggered a negative reaction in the gold market and the SPDR Gold Shares (GLD). Let's notice that the weakness in gold has pressed prices beneath key micro (coil) support at $1050. Additional weakness that breaks $1040 will trigger continuation to the $1020 area next. Meanwhile, for the DXY to get any traction, the price structure must hurdle and sustain above 76.30.
Click to enlarge
Tuesday, October 27 2009
What's It All Mean
This market has conditioned more people than a Pantene factory over the last several months. Buy the dip and leave the tip; sell the news and sing the blues. Rinse and repeat, over and over and over again.
Given the rampant run of the March lows, the heretofore 3% slippage from S&P 1100 may feel like a lot but in reality, it's a pimple on an elephant's arse. The next intuitive test will arrive when the S&P again probes the 50-day near 1050, where it snapped, crackled and popped after the jobs report in early October.
On this side of the screen, in addition to covering the remnants of my recent downside bet on Goldman (GS), I picked at my Apple (AAPL) short into yesterday's close (added into the opening jig) and let out (read: sold) some S&P puts as a function of discipline. My long dollar position (UUP, added Friday) and the Nazz puts (I'm trading around the gamma, but not very well) remained constant but these positions can change on a dime, as chronicled in real-time on the Buzz & Banter.
With regards to the big picture, while anyone can postulate about what makes the market tick, the truth is nobody knows and the best we can do is fit the pieces together as we find our way. We're edging through a critical juncture in world financial history, one that will be studied by future generations, much like the Great Depression. This is an era, not an event, and it has nothing to do with the next five percent.
The chasm between perception and reality-the disconnect between what is and what the markets tell us will be-continues to widen, in my most humble opinion. While earnings tell an optimistic tale, the former middle class is caught between the lifestyles of the rich and a struggle to exist. I'm not one for hyperbole but I'll toss the phrase "populous revolution" on your radar, if not in a literal sense but as it relates to the growing mindset of an unsettled America.
That may not be this year's business-according to the credit markets, we've bought ourselves a few years-but psychology, much like the imbalances that brought this crisis to bear, is cumulative. Trade and prepare accordingly and be a part of the solution rather than contributing to the problem. Society is simply a sum of the parts and we've all got to do our part in effecting positive change if we hope to turn the tide.
Good luck today.
Editor's note: Todd had positions in AAPL, S&P, NDX, and UUP at the time this Buzz was published.
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